Enterprises not subject to tax assessment if they comply with regulations on outsourcing processing

	Deploying VAT refund for goods of foreigners carrying out when leaving country
	Piloting tax exemption, reduction and refund information management system
	There is no wheedling or grease phenomenon in handling of tax administrative procedures

Customs officers inspect imported raw material for export processing

Facing the problems of HANJOO TRADE Co., Ltd on assessing taxes on goods imported for processing and processed by an outsourcing company, the GDVC said regulations on outsourcing goods are in the Law on Export and Import Tax, Customs Law, Decree 134/2016/ND-CP, Circular 39/2018/TT-BTC.

Regulations specify that goods imported for processing under the processing contract are exempt from import tax, goods that are raw materials, supplies imported for processing and producing products for export are subject to customs inspection and supervision upon import, during producing product until the product is exported or changed purpose of use; taxpayer or outsourcing organisation or individual must have the processing establishment for export goods in Vietnamese territory, and inform the processing establishment and processing contract to the customs authority; organisation or individual must notify the processing establishment to the customs branch with which they are expected to select to carry out customs procedures.

As per the provisions of Circular 39/2018/TT-BTC, if Vietnamese organisations and individuals sign processing contract with foreign traders but do not directly process and conduct outsourcing contract with other organisations and individuals, they must notify the outsourcing contract to the Customs branch that was notified of the manufacturing establishment before raw materials and supplied are handed over to the outsourcing partners.

The GDVC assigns the HCM City Customs Department to conduct post clearance audit at tax payers’ headquarters. If the processing firm signs a processing contract with a foreign trader and has a processing establishment in Vietnam territory and notifies its processing establishment and processing contract according to customs law, and meets regulations on tax exemption specified in Clause 2, Article 10 of Decree No.134/2016/ND-CP; but that firm sends imported raw materials, supplies or components for processing to an outsourcing company but notifies the processing establishment of the outsourcing company and the outsourcing contract later than the time limit in Circular 39/2018/TT-BTC, the establishment of the outsourcing company must be inspected.

The GDVC emphasised that during the inspection, if Customs identifies that the outsourcing firm has a processing establishment, conducts the outsourcing contract and delivers processed products to the processing company that has a processing contract with a foreign trader and the products have been exported, the processing company does not have to pay import tax but must be sanctioned for administrative violations of late notification of the processing establishment of the outsourcing company and the outsourcing contract to the customs authority.

If the processing establishment of the outsourcing company does not meet requirements, tax collection shall be conducted according to regulations.

The GDVC said to ensure the normal business and production activities of enterprises, during inspection, reviewing dossier or checking processing establishment of the outsourcing company, Customs shall not conduct a tax assessment for raw materials, supplies and components that have been sent to the outsourcing company.